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His former colleague, Karen Gaffney, isn't doing to well either at EVBAX. Like Mr Arnott at PAUDX, I suppose sooner or later the market will come to Mr Fuss
Actually, Kathleen Gaffney's fund has done much worse, almost twice the loss. Exposures to junk bonds and foreign bond (hurted by strong U.S. Dollar) were the curpit.
For those wondering why the dvd distribution of LSBRX has become so paltry of late--- despite the fund holding 35% of assets in HY bonds--- I suspect this is what's at play, and is having a significant impact:
HOW DO FOREIGN CURRENCY LOSSES IMPACT FUND DISTRIBUTIONS? During periods in which the US dollar strengthens significantly against foreign currencies, some funds that hold non-US dollar denominated bonds may realize currency losses that impact their ordinary income distributions. When a non-US dollar denominated bond is sold at a gain or loss, the sale is made up of two components: a capital gain/loss and a currency gain/loss. A recognized currency loss, in accordance with federal tax rules, decreases the amount of ordinary income the fund has available to distribute (regardless of how long the bond was held). To compensate for realized currency losses, the fund’s ordinary income must be adjusted to ensure that the fund does not distribute too much income early in its fiscal year. If currency losses are not factored into ongoing distributions, the fund risks distributing more income to shareholders than it earned during the year. This would result in a return of capital to shareholders, effectively reducing the amount of principal that shareholders have in their accounts. Global or international funds, given their larger allocation to foreign bonds, may be especially impacted by a strengthening US dollar and therefore could experience greater fluctuations in ordinary income distributions. Currency gain/loss amounts are monitored on a regular basis for each fund.
I had to edit/find to convince myself that no, there was no mention whatsoever in the interview of the elephant in the room: Fuss's bottom-dragging 22% loss in 2008, only a shade better than the equity fund PRBLX, and 4x the loss of a certain, almost unknown multi-sector fund at the time - Pimco Income. Though not exactly the same situation as today, this isn't uncharted credit-meltdown territory for Dan Fuss.
Volatile fund, but great long term record. After 2008 it bounced back, up 37% in 2009. Not for the faint of heart, but if Dan Fuss weren't 82 years old, I'd be looking at buying it now.
One of the worst investment decisions I have ever made was to invest in Dan Fuss' former co-manager Kathleen Gaffney's bond fund EVBIX. Last year Ms. Gaffney appeared on Wealthtrack and went on and on about all manor of non-bond investments which she obviously knew nothing about, having spent a career as a bond fund manager with Dan Fuss. I put in a sell order right after the show. In my opinion bonds are a part of my portfolio to provide safe income and act as a hedge against equity losses. I will take my risk in equities where there is a decent chance of significant gains, and not in bonds.
It took a few years for me to realize diversification was needed in my bond funds as well as equity funds. This, plus the earlier thread on PAUDX reinforces that.
Dan Fuss has a nasty habit of repeating the same mistakes, i.e., reaching too hard and too far out for yield and making his bond fund as volatile as an equity fund. A Dan Fuss-led bond fund should NOT be a core position in anyone's bond portfolio.
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